Recap: Oil prices were mixed on Tuesday, with both Brent and WTI falling in early trading, but as the dollar weakened, WTI rebounded, erasing early losses. After falling 1.9 percent to a session low of $55.29, WTI reversed course to trade above unchanged. Brent, which peaked at $66.83 a barrel on Monday, fell 1.8 percent to a session low of $65.58. Unable to overcome its losses, April Brent spent the remainder of the session trading below unchanged. March WTI settled at $56.09 a barrel, up 50 cents, or 0.90 percent. April Brent settled at $66.45 a barrel, down 5 cents, or 0.08 percent. March gasoline shed 0.6% to $1.564 a gallon and March heating oil fell 1.3% to $1.995 a gallon.
Technical Analysis: The longer term outlook for WTI remains to the upside, as it received an extra boost from a weaker dollar. With the market breaking and holding above $55.00, we would look for a run at the $57.20 area. Support is set at $55.00 and below that at $54.05. Don’t forget that $67.18 is the projected upside target based upon the break above the neckline on the inverse head and shoulders pattern.
Fundamental News: Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending Friday, February 15th increased by 2,734,519 barrels on the week and by 907,243 barrels from Tuesday, February 12th to 47,180,669 barrels.
The Kremlin said Russia’s President, Vladimir Putin, and Saudi Arabia’s King Salman bin Abdulaziz Al Saud, voiced their support for continued coordination on the global energy markets.
Kpler reported that Saudi crude exports fell by 1.34 million bpd in the first half of February to 6.2 million bpd, compared with the same period in January.
Refinitiv Eikon data showed that Iran’s exports of crude oil were higher than expected in January and are at least holding steady this month, as some customers have increased purchases due to waivers from US sanctions. Shipments are averaging 1.25 million bpd in February. They were between 1.1 and 1.3 million bpd in January.
Customs data and ship-tracking showed that US gasoline imports from Europe fell for a second consecutive week to about 1.5 million barrels in the week ending February 14th.
Three sources stated that Saudi Arabia plans to reduce light crude oil supplies to Asian customers for cargoes loading in March. Unlike previous months, Saudi Arabia is expected to stop giving additional supplies of Arab Extra Light crude to refiners in addition to their contractual volumes. Saudi Aramco is expected to supply full contractual volumes to several refiners in Asia despite deeper cuts in its production and exports in March. The sources said this would mean that Saudi Arabia would have to reduce exports to Europe and the US.
JBC Energy reported that global oil demand growth outlook, already below 1 million bpd for 2019, could face further downward risks due to an uncertain economic environment.
The EIA reported that US total shale region oil production in March is forecast to increase 84,000 bpd to 8.397 million bpd. This is compared with an 89,000 bpd increase forecast in February. US Bakken oil production for March is expected to increase by 13,000 bpd to 1.452 million bpd while Eagle Ford production for March is expected to increase by 8,700 bpd to 1.438 million bpd and US Permian Basin oil production is expected to increase by 43,000 bpd to 4.024 million bpd.
Enbridge said Line 4/67 nominations are at 41% apportionment for March. Its Line 2/3 nominations are at 42% apportionment for March.
Early Market Call – as of 8:35 AM EDT
WTI – Mar $55.73, down 39 cents
RBOB – Mar $1.5616, down 26 points
HO – Mar $1.9859, down 86 points
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